In the new issue of Regulation, economist Pierre Lemieux argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil. The increased supply allows the economy to produce more goods, which benefits some people, if not all of them. Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Tag: school choice

Arizona is the latest state to expand school choice. Yesterday, the Arizona legislature passed a bill to expand the type of corporations eligible to participate as donors in the Grand Canyon State’s scholarship tax credit (STC) program and to streamline the program’s tax credit approval process.

Under current law, only C-corporations are eligible to receive tax credits in return for donations to state-approved scholarship organizations. The legislation expands donor eligibility to includeS-corporations and limited liability corporations, which are typically smaller businesses relative to C-corps. Expanding the donor pool will make it easier for scholarship organizations to raise money to help low-income and disabled students attend the schools of their choice.

The bill also mandates that the Arizona Department of Revenue create a website to process the tax credit requests electronically. Since the STC program caps the total amount of tax credits issued in a given year, the AZ-DOR must pre-approve donations to be eligible for tax credits. According to the Center for Arizona Policy, the current system can be “a tedious and lengthy process [that] often discourages donors from participating.” The web-based approval process is expected to be much faster and easier.

This is the latest of numerous STC program expansions. Earlier this year, state legislatures in Iowa and Georgia voted overwhelmingly to expand their states’ STC programs. Last year, Arizona and Florida expanded their STC programs as well. In total, six of the seven states to enact STC programs before 2010 have subsequently expanded them.

The unanimous decision of the Iowa legislature to expand the state’s scholarship tax credit (STC) program yesterday once again demonstrates that school choice programs grow even more popular once implemented.

Iowa’s STC expansion bill raises the credit cap from $8.75 million to $12 million and expands the types of corporations eligible to receive tax credits for donations to scholarship organizations. The bill adds no new regulations.

Six of the seven states with STC programs enacted before 2010 have subsequently voted to expand those programs. The chart below shows the legislative support and opposition in four of those states. (The expansions in Indiana and Pennsylvania were part of legislation covering other issues so they were excluded from this analysis. The chart includes information for Arizona’s corporate-donor STC program but not its individual-donor STC program, for a similar reason.)

The most dramatic shift was in Georgia’s State House, which moved in just a few years from a fairly even divide to overwhelming support. Support in Iowa went from overwhelming to unanimous. While Florida’s Senate barely moved, support has grown considerably in the House. Arizona has also had modest increases in support for school choice in both chambers.

A survey by Harvard University’s Program on Education Policy and Governance found that 72 percent of the American public already supports scholarship tax credit programs. The survey found even higher support among parents, African-Americans, Hispanics, and registered Independents and Democrats.

There have not yet been any studies measuring whether support in a given state increases after enacting an STC program, but if legislative support is a reliable proxy then the answer appears to be in the affirmative.

With over 150,000 participating students in 12 states, scholarship tax credit (STC) programs constitute the largest and most popular form of private school choice. STC programs have expanded rapidly in recent years with six states adopting them since 2011, including Alabama this year. So which state will be next? After yesterday’s disappointing defeat in South Carolina, the answer may lie on the opposite side of the continent.

Earlier this week, Rep. Liz Pike introduced an STC bill to the Washington state legislature. The bill would provide tax credits to corporations donating to state-approved scholarship organizations that fund children from low-income families and children with disabilities attending the schools of their choice.

Like the STC program that New Hampshire enacted last year, the WA legislation follows the best practices from STC programs around the nation and avoids the flaws of the recent bills in Virginia and Alabama. Washington’s proposed STC program would be capped at $100 million in the first year and includes an “escalator” so that the program will grow over time to meet demand and it eschews unnecessary new regulations. The $5,000 cap on scholarships is high enough to benefit low-income families but low enough that the state still has the potential to save money, as shown in this chart from the Freedom Foundation comparing the maximum scholarship size to Washington state’s total public school spending per pupil:

The bill could go farther still by expanding the use of the scholarships to include educational expenses beyond just private school tuition. For example, under New Hampshire’s STC program, scholarships can cover expenses such as tutoring, textbooks, homeschool curricula, and online learning. Adding a similar provision would move the bill from school choice to educational choice, which would foster greater customization and innovation in the delivery of education.

But even without such provisions, school choice programs have been proven effective at improving student outcomes and adopting one would be a great leap forward for Washington’s education system.

Should there be a separation of school and profit? Many opponents of education reform seem to think so.

Case in point, a blog post at the Washington Post yesterday decried “outside forces that want to make big profits on the backs of our nation’s most vulnerable children.” Setting aside that the vast majority of private schools are nonprofit, the author apparently misses the fact that parents choose to send their kids to these schools. (Does it make sense to complain that other businesses are profiting “on the backs” of their paying customers?) In order to persuade parents to switch to private schools, they must offer parents something that the free-to-attend government schools do not. Even when a school choice program covers the full cost of private school tuition, the parents would merely be financially indifferent. To motivate parents to choose something other than the default government school option, private schools still must offer something better.

Moreover, it is absurd to think that profit—in the sense of financial gain—is limited only to the for-profit sector. Do teachers, principals, and other school staff from janitors to bus drivers “profit” from their salaries or wages? What of the profits made by the corporations that publish the textbooks that students read? Or construct school buildings? Or manufacture desks, whiteboards, pens, pencils, and playgrounds? Whether government- or privately-run, nearly every adult involved in the formal education process is earning a “profit” short of the parents who volunteer to chaperone the high school dance.

Those who denounce “profits” in education simply don’t understand the role of profits in a market. Perhaps they are confused because in the government-run education system with which they are familiar, there is little connection between financial gain and meeting the needs of students. In a competitive market, by contrast, profits (and, just as importantly, losses) provide valuable information. As explained in Herbert Walberg and Joseph Bast’s excellent book, Education and Capitalism: How Overcoming Our Fear of Markets and Economics Can Improve America’s Schools (which is celebrating its 10th anniversary):

In a capitalist economy, profits are the reward earned by firms that maximize the quality of services and goods, minimize overhead and bureaucracy, motivate their workers to achieve high and consistent levels of productivity, and avoid unnecessary expenditures. Successful firms sell better, cheaper, or better and cheaper products and services than do other firms. Customers notice, and business gradually shifts from inefficient to efficient firms. […]

Low-performing government schools don’t gradually lose customers and face the threat of closure, the way an inefficiently run business does. As a result, there is little urgency for reform. Their assets do not move from the control of those who have misused them into the hands of others who could do a better job. (Pages 98-9)

In our existing education system, only the financially well-off can afford to live in the expensive districts with high-performing government schools or to pay for private schooling. Without school choice programs, low-income families are locked out of these markets. Instead, their only option is the local, assigned, government school. If I blogged for WaPo, I might say that these underperforming schools are built on “the backs of our nation’s most vulnerable children.”

Claiming that private schools in Milwaukee are discriminating against students with disabilities, the Department of Justice (DOJ) sent a letter to the Wisconsin Department of Public Instruction (DPI) demanding that private schools participating in the Milwaukee school choice program comply with Title II of the Americans With Disabilities Act. As Professor Patrick Wolf explains over at Education Next, the DOJ is wrong on the facts and wrong on the law.

Wolf is part of a team of researchers that has studied the Milwaukee school choice program over five years. Their statistical analysis “confirmed that no measure of student disadvantage—not disability status, not test scores, not income, not race—was statistically associated with whether or not an 8th grade voucher student was or was not admitted to a 9th grade voucher-receiving private school.” This is exactly what the law requires. Wisconsin law forbids discrimination on the basis of disability and requires schools participating in the voucher program to accept students on a random basis.

Moreover, the DOJ is wrong on the law in treating private schools participating in the program as though they were government contractors. As Wolf explains:

Private organizations normally are exempt from Title II of ADA but the DOJ argues that the law applies to private schools in the MPCP because the government is contracting with them to provide a public service (the education of K-12 students). This claim flies in the face of the facts and case-law surrounding the program. The voucher program does not involve any contracts, of any kind, between any government organization and the participating private schools. Students need to meet certain eligibility restrictions to participate in the program, as do interested private schools. Once both are deemed eligible by the state, students choose schools and government funds flow to the private schools based on the choices families have made and consistent with the laws governing the program, not based on any “contract.” In fact, the Wisconsin State Statute that governs the MPCP, §119.23, is entirely separate from Wisconsin State Statute §119.235 entitled “Contracts with Private Schools and Agencies.” Nothing could make the point clearer that the MPCP is not a case of government contracting for education services.

Wolf suspects that the DOJ’s letter came as a result of the Wisconsin DPI’s report that 1.6 percent of choice students have a disability. Since the DPI is not authorized to collect that information, they estimated the number of students with disabilities using the number of choice students given accommodations on the state accountability exam. However, as Wolf explains, that is a highly flawed proxy since only a minority of students with disabilities are given such accommodations. Wolf’s team of researchers estimated that the number of choice students with disabilities between 7.5 and 14.6 percent, with their best estimate being 11.4 percent.

The DOJ’s overreach may be unsurprising in light of other recent scandals, but it also sets a terrible precedent. Parents choosing to use their vouchers at private educational institutions do not render those institutions “government contractors” any more than grocery stores become “government contractors” when citizens use their EBT cards to purchase food there. The Obama administration’s unlawful and misguided attempt to hamper school choice programs with additional red tape should be vigorously resisted.

A new study this week finds that school mothers overwhelmingly support school choice. According to the Friedman Foundation’s survey, 69 percent of American mothers of school-aged children supported scholarship tax credit (STC) programs while only 19 percent opposed them. Americans in general support STC programs by a margin of 66 percent to 24 percent and non-schoolers support them 64 percent to 26 percent.

The survey found even higher support for STC programs among political independents, middle-income families, and African Americans (72 percent each). The greatest opposition (35 percent) came from high-income families who are already financially able to live in a district with a high-performing public school or to pay for their children to attend a private school.

The Louisiana Supreme Court struck down Louisiana’s nascent school voucher program today. There were about 5,000 LA students already receiving vouchers and about 8,000 were approved to receive vouchers in the next school year. The court ruled that once public funds are allocated to the state’s Minimum Foundation Program (MFP), the constitution prohibits reallocating those funds for other purposes.

Fortunately, there is another school choice program that rests on much firmer constitutional ground. Louisiana’s scholarship tax credit program avoids the voucher program’s constitutional troubles because its funds never enter the MFP. Indeed, they actually never enter the state treasury at all. Instead, taxpayers receive a credit for donations to nonprofit “school tuition organizations” that fund low-income students attending the schools of their choice. The program gives priority to students living in districts with failing government schools.

While Governor Jindal and school choice supporters across the Pelican State are disappointed with the decision, they need not despair. Instead, they should channel their efforts toward expanding the scholarship tax credit program.